Detroit News reports that Suzuki’s U.S. distribution arm has filed for bankruptcy, saying it will exit the U.S. auto market to focus on sales of motorcycles and all-terrain vehicles. This will end new Suzuki automobile sales in the United States.
The company has not done well in the US, with analysts citing low margins, low-priced cars and small margins.
Suzuki sold just 2,023 vehicles last month, and in 2012, Suzuki has sold just over 21,000 new cars in the United States, a long way short of the hoped-for 200,000 vehicles a year which was proposed initially.
It should be understood that Suzuki Motor Corp. is not filing for bankruptcy, and there are plans to purchase the assets of the old company, through a new U.S. subsidiary that will retain the American Suzuki Motor Corp. brand name.
Analyst Noriyuki Matsushima at Citi Research in Tokyo said the withdrawal will be positive for earnings. “In auto development, Suzuki has already abandoned the development of large models of the sort that sell in the U.S. and is focusing resources on small, low-cost models that are popular in emerging markets,” Matsushima said. Suzuki’s struggle shows that while Japan’s leading automakers, Toyota Motor Corp., Nissan Motor Co., and Honda Motor Co., are tough competitors in the U.S. market, smaller carmakers, such as Suzuki and Mazda Motor Corp., are finding it hard to cope with the competition, regulatory costs and unfavorable currency rates. The yen is trading near record highs against the dollar, making it nearly impossible to make money exporting vehicles from Japan.